Fu**-off Money…makes you think
I saw an interesting post by a bunch of hackers discussing what it would take to get out of the game or fu**-off out of it as they put it. (http://www.danielharan.com/2008/09/04/vc-part-2-fuck-off-money/)
Which startup odds do you prefer?
50% odds of making $1 million
20% odds of making $20 millionAssume the work involved is the same, and that in both cases that the alternative is a complete loss. If you’re economically rational, you’ll compute the “expected value” of each investment.
50% of 1 million => 500k
20% of 20 million => 4 millionVC has to be rational to maximize return for their partners. They have to be rational. And that’s the crux of the problem: our incentives are not aligned.
We don’t have to play by the same rules. Just as the cost of starting a company has been going down, it’s also become less risky to pull off small successes.
20 million isn’t 20 times more useful than 1 million. It won’t make you 20 times happier or let you be 20 times more effective.
It raises a point I often argue with my friends about how to raise funds and whether a home run is always the smartest option for a business.
For example you can build a perfectly good, profitable business on angel funds and sell it for a smaller amount with less risk and no VC ratchets.
However, if you want to make a lot more money and don’t care about the odds being way lower too then VC can be the best way to go, you get more runway and pressure to get the much bigger exit and IF that pays off you will hopefully get a bigger pay-day. This assumes you don’t get fired or diluted by the VC along the way!
In the end it comes down to what you really want out of life and if you measure the money how much do you really need to live off.
If you know that then you can work out your fu**-off money exit needs!
Take a look at my book and work out your life goals first, then you can work out what’s best for you!
Businesses don’t fail..people run out of "juice"
I often read all the stats about business failures and they mostly seem rather lacking in enough detail for me to really believe them, much in the same way I don’t believe in people going the other way and offering get rich quick schemes.
Neither seems right in my gut – Business isn’t that simple. Businesses don’t simply fail due to cashflow issues and making a million overnight just doesn’t happen unless you play the ‘lottery’.
In my humble opinion there are many underlying reasons so many businesses fail across the world and they are not about money, race, environment, business type etc. Sure you are more likely to fail in a high risk business like catering (restaurants), or if the economy changes or a tidal wave hits your region but in the run of the mill town why do all the others fail so often?
I think its actually mostly about motivation – dig deeper into some of the stats and you seen vast numbers of businesses close without leaving debts or stranding staff, they simply wind down and stop trading.
These businesses have obviously been closed by the owners under their own volition and not under duress of the bank or creditors.
My view is that far too many people start businesses on a whim or because they feel they must for a variety of reasons from family background to redundancy but in all the cases I think that many of the entrepreneurs could have carried on and become successful or indeed do so later on after the one idea is dead.
This approach to starting a business seems quite universal, I found myself doing it in my early days and I find almost all my mentees trying to do it – they have an idea and just jump in with both feet.
What they don’t seem to do often enough is any long range life planning to match with their business goals, they simply seem to split these two areas of their life – business and life goals in two and not make a conscious connection between them.
In these instances, as I have found myself, starting a business is like getting a new boy/girlfriend – its all infatuation for the first phase of the relationship and then as time goes on that feeling fades and the hard work of relationship building starts! The same with a business, we all get carried away and then a few years down the road (or less) we wake up one morning and realize that the business seems to be running our lives (often in the wrong direction) and we wish we were doing something different or going a different way but by then its too late.
Much like with a relationship that’s gotten tired or that baby has suddenly arrived, the same goes with a business but with often larger consequences – so sometimes we feel trapped – but in both cases we feel that we wish we had thought it all through a bit more at the beginning!
However, if we end up with a great relationship this can be because it grew out of a friendship and lots of mutual passions and a single life vision.
Well you can think of a great business idea in the same way – did I live with the idea for a while and test it out before committing 100%? Did I consider my life goals for now and the future and then try and match those to the business idea? Did I work out my own needs, strengths and ambitions and make sure that our business changed to meet these rather than the other way around?
If we did all these things then we are more likely to get through the ups and downs, to still have the ‘passion’ and juice a few years in and we had the enthusiasm to make it through when we may have given up in the past?
This is my theory as to why businesses fail – they make the wrong decisions early on and then regret them all years later and then decide to close down their businesses…and this explains the very high failure rate.
Make sure you are not one of these “statistics” by planning and thinking before you leap.
Why not try looking at my book that’s designed to help with this process:
Be an entrepreneur, not a wannabepreneur.
Taking The Leap- Don’t Just Be A “Wannabepreneur”
So many people I have met over the years have been ‘wannabe’s’ …they want to be this or that in their dreams or desires but never make the leap from where they are to where they want to be.
Why is this? Well it’s the “horse and the burning barn” theory – A horse would rather run back into a burning barn then run away as it prefers what it knows – better the devil you know etc
Well this is a great instinct in theory – at least you understand the risks and downsides of what you are doing and we all know that fear is simply not knowing.
So of course most people talk about how much they hate what they are doing in their lives but never make the change.
In order to make these changes you need IMPETUS and A BIG MOTIVATION = often this is a PAIN of some sort that reaches a THRESHOLD over which you can make the change. In small decisions these thresholds are usually low but in life changing ones they are necessarily high.
One of the reasons I wrote my book was to help people understand the unknown i.e. becoming an entrepreneur (dispelling the fear and building confidence) and to also look at their lives in detail to help build up and understand the pain points so a threshold could be breached (or not) in order to make the leap.
So if you have the feeling you are fed up and want to make any change, look at the alternatives in detail to remove the fear and then weigh up the pro/cons again detail along with your own unique ‘life vision’ and passions and try and breach the threshold and move the action. If you can’t reach breaking point then you don’t ave enough motivation and can either fix that or use the facts to show that you are actually in the best position for you right now.
In the case of being an Entrepreneur, if you feel in your gut that should be one then take the quiz on my website www.tobeanentrepreneur.com and check out your personal traits. Then use the materials in the book to build a strong and fact based decision tree that will lead to a dispassionate view as to whether it’s the life for you vs. your long term life vision.
The other big question is – ‘is now the right time’ to do this?
For example in a recent meeting one of my new mentees told me he was about to take the leap but he also told me that he was about to have his first child!!
I asked him to consider the timing issue as both of these events are incredibly time consuming, sleep depriving and emotionally draining – doing them at the same time is just plain dumb.
He decided to put back his big leap until after the baby was 6 months old – a sound decision.
No I do hear that many people will advise to ‘just do it’ when it comes to becoming an entrepreneur and that’s not bad advice for those procrastinating but frankly a little analysis will give the opportunity to pick the best moment to take the leap and not to just do it on impulse!
Why not take a look at the book and see if it can help you make the best decision.
Winning once is easy, doing it through adversity is the real test of an entrepreneur
Spotted this great video on failing and risk on Brad’s excellent blog and every aspiring entrepreneur should take this video to heart – they will need a ton of courage and persistence to make their life a success.
In my book “So you want to be an entrepreneur” the no.1 trait for entrepreneurial success is persistence and this often comes through many failures – small one’s along the road on the current project or bigger one’s in your past. The key is to accept the risk of failure and to try your best and focus on your outcome – then triumph through adversity!
The universal power behind your success…
Contribution.
What?
Yes – contribution!
OK, so what does that mean…well my definition is:
“Giving with no expectation of anything in return”.
So how can “contribution” lead to success?
I know this seems like a long shot or a disconnect, surely its all about being smart and hard working?
Well that depends on what you believe, you still need to do those things but if you think about it whenever you were really helpful and thoughtful about others and helped or gave without looking for a reward – what were the results?
I don’t mean, where the people you helped grateful or appreciative. Can you think back if you did that over a period of time, did life change in any way? Did good things happen to you in an unrelated way? Perhaps some of your goals or dreams came closer, or people came into your life that helped you in some way?
This may all sound odd, or even crazy to you, but this is what happens to me all the time!
I call it the power of the universe – you put in some positive energy and this gets recycled and comes back to you. It has happened to me so much I now believe it.
Before you write me off I have to tell you I am a very logical and sometimes cynical observer of life – I am not a big believer in “mumbo jumbo”, I like to see real results and empirical evidence.
So why do I believe in this seemingly illogical and improbable theory?
Evidence, that’s why, I can’t explain it logically but the more I give the more I get…
When I give or help I do it because I want to and not because I want praise, or money, or recognition or anything. I expect nothing in return.
However, out of no-where, people help me and positive things happen to speed me on my life’s journey…I choose to connect these two things together.
Now, what’s great is that if you have taken the time to create a “life vision” and the associated dreams, goals and outcomes you will find these accelerating the more you contribute to society.
Events, resources and people will help you get towards your dreams without you directly asking them too…your gift will be returned.
How does this help with your success then? – well to me “success” is achieving your life vision and not buying a car or hitting a short term goal.
Again and again I have seen the power of this way of living.
I don’t think you will believe me until you try it…go on just get started helping others with your own unique gift (not money) – this can be giving your time, just simply supporting others – you will know what you can do to help, just try it!
If you do this and then look at the change in your life after a reasonable period, say a few months, see what you notice, how do you feel now, have you noticed others helping you or have you moved along life’s journey faster and with more passion?
Did you notice “odd” changes? – positive things happened to you and people helped you without you specifically requesting them to?
Go ahead…give me the benefit of the doubt and try it.
Be prepared to be amazed.
P.S. Don’t “give to get” (most peoples’ approach) this will not work – you must give selflessly, sometimes anonymously without any expectation of reward.
